Get Paid More Quickly For Your Video Work
Getting paid more quickly makes your life easier. After completing a project and putting in a lot of time and effort it’s no fun to wait around for months hoping someone will pay for it. Anything you can do to be paid earlier in the project cycle and faster once you bill the client will help your business grow and keep you sane.
If your clients are taking too long to pay try these 6 things:
Put Your Payment Terms in Your Contract
First and foremost, make sure your payment terms are in your contract or Statement of Work with your client. This sets the table from the beginning and your client won’t be surprised when they get the first invoice from you and it has NET 30 terms, for example. You also will now have something with your client’s signature agreeing to your payment terms.
Consider Payment Milestones
If you typically invoice only once the job is done, or in some other lump-sum approach, consider trying a milestone approach instead. One structure that I found successful when I managed billing for a production company was 50% on signing of the SOW, 25% upon the shoot day (or otherwise at the start of “production”) and the final 25% on completion of the project. The client sees the invoices while the project is still in flight and is excited about seeing all videos come together. This is a much better time to invoice than sending a full lump-sum invoice once the project is done and the client has moved on to the next exciting thing. It also has the benefit that you can stop the project from moving to the next phase if you’re still waiting for payment from the last milestone.
I would typically invoice 50/25/25 with NET 30 terms and it worked out that pre-pro would be at least 30 days so I could check for payment before the shoot day, and check for payment of the second invoice before delivering the final videos when production through post would take another 30+ days. But make it work for how the schedule typically lands on your projects. Maybe you invoice for the first 50% with “due on receipt” terms and then request NET 15 for the latter invoices. Whatever the structure you land on make sure to put it in your SOW along with your payment terms for each invoice.
This structure has another really valuable benefit: You can get cash up front to start paying for the project hard costs and otherwise fund the project instead of having to borrow funds or use profit from another project.
Make Sure Your Client Has Your W9
Your W9 is what tells your client (more specifically their accounting department) how your company is set up and whether or not they have to issue you a 1099 at year end. Many accounting departments will require this before they issue your first check.
When you’re working for larger companies it’s more likely that your contact and the person writing checks are different. If you don’t send your W9 before they request it you’re relying on the accounting department to reach out to your contact, and that contact reaching out to you for the W9, then that contact returning the W9 to accounting. Everyone is busy and someone in that chain is likely to drop the ball (you might even forget they requested it!). In the mean time all that back and forth adds days to when you’ll receive that check.
I suggest filling out a generic W9, saving it somewhere easy to drag into an email and sending it with BOTH your signed SOW and your first invoice whenever you work with a new client.
It’s a rather simple form. Just fill out your business name, address, entity type, Tax ID and sign it. (Certain entities may also need to fill out box 4 – see instructions on page 3.) For your generic one keep the “Requester” box empty and if a client wants one with their name filled out just fill out a new form for that specific client with box 4 filled out.
Be Sure to Get Out That Invoice
This one might seem like it goes without saying, but it’s not enough to have an SOW or contract that says when you’ll get paid, you also need to send them a physical invoice.
There are some other great reasons for getting out an invoice.
- First and foremost it’s a reminder. For your client and you. Clients very rarely are going to remember to pay you what was agreed back when you first discussed the project. It gets rid of any ambiguity about when (or what) they owe you and you won’t forget to collect when you see an invoice is still outstanding.
- It’s more professional. Your client will more likely take you seriously and less likely try to bully you to agree to take less than what was originally promised.
- It’s the most important document you ever need to get serious about collecting from them. (collections, small claims court, etc.)
- It sets expectations on when that payment is due. Put your payment terms on the invoice.
- It simplifies your bookkeeping immensely. You may think it’s an extra step to send an invoice and you’d be better just keeping track of your income another way. But I can assure you it’s one step that will save you 10 steps later. Instead of always having to figure out who owes you what your invoicing system will keep track of that for you. At the end of the year when you go to file taxes you won’t have to chase all the various deposits on your statements and figure out which are business related or not. I could go on with examples but just take my word as someone who has done bookkeeping for multiple production companies and small business.: send an invoice for every project.
Contact the Company’s Accounts Payable Department When Overdue
When your client contact and the person writing the checks differs you’ll often find that your client contact won’t have any status or control on your payment. You can ask your contact to reach out to accounting when an invoice is overdue, but that puts you in an awkward spot with your contact and them with accounting. More importantly, it takes the focus away from the awesome work you’re doing. You might find it more efficient to reach out to the accounting department directly (if you have their contact info) to ask about your outstanding invoice. Just be delicate about how you do it and don’t throw your contact under the bus. Try sending an email with a copy of your invoice, W9 and a simple message such as “I just wanted check the status of invoice #____ and see if a check has already been issued” or “I just wanted to confirm that your department has received of copy of this invoice, #______.”
Don’t Be Afraid to be Clear with Agencies About Your Terms
This can be a tricky spot because sometimes the agency truly can’t pay you until they’ve been paid. But this is where having your invoice structure in your SOW and setting expectations early can help. If the agency knows that you typically invoice for some portion up front they may be able to make their agreement with the end client accommodate that. Sometimes it may just be a case of mismatch; they invoice with NET 45 terms while you invoice with NET 30. Some things like that will be unavoidable but the more you can do to set the table with how you do business – SOW, invoice structure, payment terms, etc. – the better your chances of getting what you expect. Maybe that won’t happen on the first project with this agency but when they see your great work and know they want to hire you again, they will already know what to negotiate with the end client when first setting up the project.
As much as you love filming and being creative, at the end of the day you’ve got to take care of the business side as well. It’s what allows you to keep doing what you love and the more time you spend stressing about outstanding invoices or tracking down payments the less time you get to spend shooting. Try out some or all of the above tips and see if the time you spend waiting to get paid improves at all.